Supply chain resilience requires different fixes for different shocks
Persistent mineral dependencies need different remedies from temporary factory disruptions, according to an October 26, 2026 Bank for International Settlements (BIS) bulletin. The authors contrast rare earth processing with Thailand's 2011 floods.
Processing locks in mineral dependence
Ryan Banerjee, Michael Chui and Leonardo Gambacorta identify processing capacity, rather than physical scarcity, as the central rare earth vulnerability.
China held around 60 percent of global reserves in 2025.
For neodymium–iron–boron magnets, its mining share was around 58 percent, versus approximately 90 percent of separation, refining and manufacturing capacity.
Industrial policy, technological expertise, environmental compliance costs and scale supported its dominance.
Japan reduced China's share of its rare earth imports from around 80 percent to as low as 40 percent in the mid-2010s.
Alternatives generally cost more, and all Japanese lanthanum oxide imports still originate in China.
Inventories and trade rerouting offer relief but face limits.
Flood recovery took 46 days
Thailand supplied around 40 percent of global hard disk drives before the 2011 floods; its production fell 55 percent year on year in Q4. Western Digital's shipments fell from 52.2 million units in Q4 2010 to 28.5 million a year later, but production restarted within 46 days.
It moved capacity to Malaysia, used protected inventories and retained 38,000 employees at 75 percent pay.
Separately, the bulletin cites an estimated $3.1 billion US GDP loss, or 0.01 percent, from a complete one-year Chinese gallium export embargo.
Concentration alone is insufficient
The authors reject blanket reshoring as a resilience strategy because it can sacrifice specialization gains without proportionate protection.
Persistent dependencies warrant alternative capacity and technologies.
Temporary shocks call for inventories, supplier redundancy and preparedness.